BWPT
Contact our analyst Achmadi
BUY
5th December 2024
Current price Rp 60
Target price Rp 82
5th December 2024
Current price Rp 60
Target price Rp 82
Production Challenges Persist
Despite a slight quarterly rebound in Q2-2024, BWPT’s performance for 9M-2024 and Q3-2024 remained underwhelming. Total production for 9M-2024 dropped by -13.87% YoY to 871.89 MT (nucleus-only), largely driven by a -20.79% decline in CPO production. The sharpest decline occurred in Q3-2024, with PK production falling by -13.15% YoY. These setbacks were primarily attributed to the divestment of West Kalimantan subsidiaries, which reduced the number of company-operated mills from eight to seven. Compounding these challenges were the effects of the El Niño phenomenon and extended public holidays during 1H-2024. However, BWPT achieved some operational efficiencies, evidenced by YoY improvements in OER and KER, which grew by +4% and +6%, respectively. Looking ahead, the company is focused on boosting productivity through new planting initiatives and system digitization. Construction of a new mill at PT Jaya Mandiri Sukses (JMS) in East Kalimantan is also underway, with operations expected to commence in Q2-2025. By the end of 2024, BWPT anticipates total production to reach 1.15 million MT.
Despite a slight quarterly rebound in Q2-2024, BWPT’s performance for 9M-2024 and Q3-2024 remained underwhelming. Total production for 9M-2024 dropped by -13.87% YoY to 871.89 MT (nucleus-only), largely driven by a -20.79% decline in CPO production. The sharpest decline occurred in Q3-2024, with PK production falling by -13.15% YoY. These setbacks were primarily attributed to the divestment of West Kalimantan subsidiaries, which reduced the number of company-operated mills from eight to seven. Compounding these challenges were the effects of the El Niño phenomenon and extended public holidays during 1H-2024. However, BWPT achieved some operational efficiencies, evidenced by YoY improvements in OER and KER, which grew by +4% and +6%, respectively. Looking ahead, the company is focused on boosting productivity through new planting initiatives and system digitization. Construction of a new mill at PT Jaya Mandiri Sukses (JMS) in East Kalimantan is also underway, with operations expected to commence in Q2-2025. By the end of 2024, BWPT anticipates total production to reach 1.15 million MT.
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Strong Profitability Amid Declining Revenue
Despite a -8.88% drop in revenue, BWPT reported a +48.99% YoY increase in Net Income Attributable to the Parent Entity for 9M-2024, totaling IDR 179 billion. This remarkable profitability growth was driven by a -16.24% YoY reduction in COGS, primarily due to lower fertilizer costs and a -10.44% YoY decline in mature upkeep expenses. Additionally, a -15.53% YoY reduction in interest expenses contributed to the improved bottom line, reflecting the company’s strategic shift toward debt-capital market financing. EBITDA also rose by +10.38% YoY, reaching IDR 930.19 billion. For the full year, Net Income Attributable to the Parent Entity is projected to grow by +21.32% YoY to IDR 214.76 billion, with EBITDA expected to increase to IDR 1.17 trillion, reflecting a +4.76% YoY growth.
Enhanced Solvency through Strategic Financing
BWPT’s solvency has significantly improved, as evidenced by a reduction in its Debt-to-Equity Ratio (DER) to 1.96x as of September 2024, down -0.54x YoY. This improvement stems from the company’s strategy of transitioning from traditional bank loans to corporate bonds. In September 2024, BWPT issued bonds under the name “Obligasi Berkelanjutan I Eagle High Plantations Tahap 1 Tahun 2024” with a nominal value of IDR 61.845 billion, maturing on July 20, 2025, and carrying an annual interest rate of 9.75%.We forecast further solvency improvements, with the DER expected to decline to 1.83x by the end of 2024.
Valuation: BUY, 37% potential upside
Following the release of 9M-2024 results, we have revised our EV/EBITDA target to 5.84x. Maintaining our “Buy” recommendation, we assign a new target price of IDR 82/share, which reflects a valuation of 11.91x PER and offers a potential upside of +37%.
Despite a -8.88% drop in revenue, BWPT reported a +48.99% YoY increase in Net Income Attributable to the Parent Entity for 9M-2024, totaling IDR 179 billion. This remarkable profitability growth was driven by a -16.24% YoY reduction in COGS, primarily due to lower fertilizer costs and a -10.44% YoY decline in mature upkeep expenses. Additionally, a -15.53% YoY reduction in interest expenses contributed to the improved bottom line, reflecting the company’s strategic shift toward debt-capital market financing. EBITDA also rose by +10.38% YoY, reaching IDR 930.19 billion. For the full year, Net Income Attributable to the Parent Entity is projected to grow by +21.32% YoY to IDR 214.76 billion, with EBITDA expected to increase to IDR 1.17 trillion, reflecting a +4.76% YoY growth.
Enhanced Solvency through Strategic Financing
BWPT’s solvency has significantly improved, as evidenced by a reduction in its Debt-to-Equity Ratio (DER) to 1.96x as of September 2024, down -0.54x YoY. This improvement stems from the company’s strategy of transitioning from traditional bank loans to corporate bonds. In September 2024, BWPT issued bonds under the name “Obligasi Berkelanjutan I Eagle High Plantations Tahap 1 Tahun 2024” with a nominal value of IDR 61.845 billion, maturing on July 20, 2025, and carrying an annual interest rate of 9.75%.We forecast further solvency improvements, with the DER expected to decline to 1.83x by the end of 2024.
Valuation: BUY, 37% potential upside
Following the release of 9M-2024 results, we have revised our EV/EBITDA target to 5.84x. Maintaining our “Buy” recommendation, we assign a new target price of IDR 82/share, which reflects a valuation of 11.91x PER and offers a potential upside of +37%.
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